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Connecticut Bankruptcy Law Blog

Is tax debt discharged in Chapter 7 bankruptcy?

Dealing with the Internal Revenue Service can be a nightmare if you are a Connecticut resident who cannot afford to pay the federal taxes you owe. However, if you try to avoid dealing with the IRS over the taxes owed, it can impose tax liens on your property that are even more burdensome. You may wonder if you are able to discharge your tax debt by filing for Chapter 7 bankruptcy. According to FindLaw, it may be possible to discharge some tax debt through Chapter 7, but only under certain circumstances. 

Particularly, it is in your interest to work proactively with the IRS to avoid a tax lien on your property because even if you succeed in discharging your tax debt through Chapter 7 bankruptcy, the lien will remain. Additionally, some types of tax debt are ineligible for discharge under any circumstance. For example, if you failed to file your taxes at all, you cannot discharge the resulting tax debt with bankruptcy.

What are some foreclosure scams to watch out for?

Missing mortgage payments and facing foreclosure in Connecticut is a serious financial situation, and you may not know where to turn for help. Unfortunately, there are unscrupulous people out there who view your misfortune as an opportunity to profit from your pain. They may offer you ways out of your financial difficulty that may seem too good to be true, and according to FindLaw, that is because they are usually scams designed to cheat you out of your home by taking advantage of your desperation. 

In particular, be wary of financial counseling agencies. Some of these are legitimate and offer services such as helping you to negotiate payment plans with creditors. However, others are scams and will charge you a fee for services they will never perform on your behalf. Before you pay any money to or sign any agreement with a counseling agency, be sure to research it to ensure it is reputable and trustworthy. 

What is the Relief Refinance Program?

If you are a Connecticut homeowner facing difficult financial times, you may be able to qualify for the new Relief Refinance Program to avoid foreclosure of your home. As TSP Mortgage explains, the Relief Refinance Program went into effect on Nov. 1, 2018, and replaces the now defunct Home Affordable Refinance Program, popularly known as HARP, that went into effect in 2009 after the housing bubble burst in 2008 and existed through 2018.

Essentially, the Relief Refinance Program represents the new and improved version of HARP and offers you many advantages, including the following:

  • You can refinance your mortgage so as to get better terms.
  • You have no loan-to-value restrictions on your new fixed rate loan.
  • The annual adjustable-rate mortgage percentage caps out at 105% of the loan-to-value.
  • You obtain your new mortgage loan through a private mortgage insurance transfer.
  • You have minimal paperwork requirements.

How can you recognize a foreclosure rescue scam?

When you are having severe financial difficulties, possibly including the threat of foreclosure, in Connecticut, it can feel like you are drowning. An offer of help paying off your debts and preventing foreclosure may seem like a lifeline. Unfortunately, foreclosure rescue scams are prevalent, and those who run them are attempting to take advantage of your panic and desperation in order to make money off you. If you fall for one of these scams, you may end up in even worse financial trouble than you were in to begin with. 

People who run foreclosure rescue scams are adept at making the offer sound like the solution to all your problems, and it can be easy to fall for their tricks. However, if you keep a cool head and look out for warning signs that the deal may be too good to be true, you can avoid becoming a victim. 

The abusive tactics debt collectors may use

Connecticut residents who have fallen into debt may find themselves being pestered by debt collectors or collection agencies. While in many cases these instances are just annoying, they can be potentially harmful and frightening if the collector uses tactics that are considered illegal.

FindLaw starts by taking a look at the Fair Debt Collection Practices Act (FDCPA), started solely to protect people from aggressive, unlawful debt collection tactics. It prohibits debt collectors from doing any of the following:

  • Continuous or repeated calling
  • Not ceasing upon request
  • Calling or visiting at all hours
  • Deceiving people or misrepresenting themselves or information
  • Public shame such as publishing the customer's name on a "bad debt" list
  • Reporting false information or threatening to do so
  • Threatening arrest or using profane language

Can credit cards help to rebuild credit following bankruptcy?

Filing for bankruptcy can have a major impact on your credit score, as well as your ability to purchase a home, take out a loan or make financial transactions in the future. There are ways, however, that you can rebuild your credit once your bankruptcy has been discharged. While extensive credit card expenses may have contributed to your need to file for bankruptcy in the first place, certain credit cards may help you rebuild your credit and finally get back on track. Some credit cards, on the other hand, may cause you to accumulate even more debt even after your bankruptcy is discharged.

Subprime credit lending agencies offer credit to people who may not be able to obtain credit through traditional means. In order to offset the risk of lending to people with low credit scores, these agencies issue high interest rates, as well as additional annual fees and maintenance fees. If not careful, you could end up under water with a host of credit card debt due to these high interest rates and fees.

What information is required when you file for Chapter 13?

Since you have discovered that your growing debt is creating extreme difficulties in your ability to repay your lenders on time, you have considered filing for bankruptcy in Connecticut. With your decision made, you are now working to file your claim and hear the outcome of your request. Understanding the information that is required for your claim to be considered is important to save yourself time by completing the documentation correctly from the start.

According to the United States Courts, you will need to make a comprehensive list of all of the property that you own. You will also be required to detail how much income you are receiving including where it comes from, how frequently you receive it and how much each payment is for. Along with this, you will need to disclose an approximated list of your expenses and where your money goes once you receive compensation of any kind. A complete list of the entities that you owe money to, including for how much and what for, will be required to complete your claim. 

How do people view their personal debt?

If you are one of the numerous Connecticut residents struggling with rising credit card balances and other debt, you may have quite negative feelings about the amount of debt you have accumulated, often out of necessity. Although most people keep their financial situations private and refuse to share their fears and concerns with others, it may help you to know what a recent survey of Americans revealed about the feelings they have with regard to their personal debt.

As Discover.com reports, a full 80 percent of those surveyed said that they have a minimum of one type of debt, often a home mortgage or medical debt. Nevertheless, the majority of them do not feel that they have too much debt. As a matter of fact, the figures show the following:

  • Forty percent say they have too much debt, with 47 percent of these people fallng within the 35-54 age bracket.
  • Forty-three percent of those saying they make less than $25,000 each year believe they have too much debt.
  • Only 34 percent of those saying they make over $75,000 each year believe they have too much debt.
  • Educational level has little or no bearing on a person’s feelings about debt. Thirty-nine percent of those with a high school education believe they have too much debt, while 38 percent of those with a college degree feel the same.
  • Not surprisingly, only 18 percent of the people who said they believe they have too much debt feel happy about it.

How can you strip away a second mortgage?

There are several reasons homeowners take out a second mortgage on their homes, including but not limited to skirting homeowners' insurance requirements, utilizing the equity in one's home or borrowing against the home. Whatever your reason for pulling out a second mortgage on your Connecticut home, do not feel bad if your second mortgage has put you in over your head debt-wise. Also, know that relief options are available to you that do not involve foreclosing on your home.

According to SF Gate, you may be able to strip off your second mortgage via bankruptcy provided your home does not have equity in it and that you meet eligibility requirements. This is because bankruptcy courts, on occasion, treat second mortgages as unsecured loans. If you plan to go this route, there are a few steps you need to take before obtaining financial relief.

Hundreds of Sears stores set to close in Chapter 11 bankruptcy

The modern age of internet shopping and big box stores hasn’t been good for many companies, even stores that have been successful for decades. Competition can be good when it keeps prices down for consumers, but too much of it can make it hard for some stores to compete. Consequently, some have no choice but to file for Chapter 11 bankruptcy or close their doors. Many residents of Connecticut and elsewhere may consider the closing of numerous iconic stores the end of an era.

The national retail giant Sears is not exempt from competitors luring away enough of its customers to have a significant impact. According to News 12 Connecticut, the Sears company, which has been in business for 130 years, filed for Chapter 11 bankruptcy last October. Spokespeople have cited numerous reasons the retailer is experiencing difficulties, particularly competition from other local businesses and online shopping. The Great Recession of several years ago is also said to have contributed to the company’s lingering difficulties. After 182 Sears stores nationwide were set to close, an additional 80 were scheduled to close their doors by March.

Discuss Your Case With A
Respected Bankruptcy Attorney

Contact my office to discuss your debt relief needs directly with me as your lawyer. I offer a free initial consultation to all new clients where you can learn more about your legal options and what I can do to help you. I am available during regular business hours and by appointment at other times. You can reach me by phone at 860-242-0574 and 860-952-3674 or via email.

My law firm is a debt relief agency as so designated by Congress in the year 2005. I help people file for bankruptcy relief under Title 11 of the United States Code, known as the Bankruptcy Code.

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